A New Approach in Strategy Formulation using Clustering Algorithm: An Instance in a Service Company

The ever severe dynamic competitive environment has led to increasing complexity of strategic decision making in giant organizations. Strategy formulation is one of basic processes in achieving long range goals. Since, in ordinary methods considering all factors and their significance in accomplishing individual goals are almost impossible. Here, a new approach based on clustering method is proposed to assist the decision makers in formulating strategies. Having extracted the internal and external factors, after setting long range goals, the factor-goal matrices are generated according to the impact rate of factors on goals. According to created matrices, clusters including goals and factors are formed. By considering individual clusters the strategies are proposed according to the current state of clusters for the organization. By applying this new method the opportunity of considering the impact of all factors and its interactions on goals are not lost. Strategy-factor and strategy-goal matrices are utilized to validate the proposed method. To show the appropriateness and practicality of our approach, particularly in an environment with a large number of interacting goals and factors, we have implemented the approach in Mahmodabad Training Center (MTC) in Iran. The resulting goal-factor, current and dated states of clusters, also, strategy-goal and strategy-factor matrices for model validation and route branch indices for finding out how the organization achieved each goal are reported.